Retailer Roundtable: A Great Year, But ...
Ag retailers taking part in the 3rd annual State of the Industry roundtable event were pleased with how their companies did in 2011 and thought 2012 would be another good year. There were hints for caution, however.
December 16, 2011
For the past three years during the annual Agricultural Retailers Association (ARA) meeting, CropLife® magazine and its State of the Industry sponsors have invited some of the nation’s top ag retailers together for a quick roundtable discussion. Here, in an open forum, participants can discuss their hopes and fears for the year that’s been and the year to come.
During the 2011 ARA meeting, nine ag retailers ranging from upstate New York to the California coast and everywhere inbetween were on hand to take part in the roundtable discussion. The event was moderated by CropLife Group Editor Paul Schrimpf.
For the most part, there were two general take-aways from the meeting. First, when it came to the performance of 2011’s ag retail marketplace, participants were very pleased, with each pointing to brisk crop input and services sales helping to drive overall industry growth. Virtually all the roundtable retailers agreed that fertilizer sales were the main market driver, but several noted that their companies crop protection product sales were also quite good.
“Usually, most of our year-over-year sales growth comes from the grain side of our business,” said one participant. “But in 2011, fertilizer is what drove our sales.”
A Look Ahead
Looking forward to 2012, most roundtable participants thought that it would likely mirror 2011 in overall market performance. But one retailer was worried about the continued consolidation of grower-customers in his area. “There has been a lot of consolidation on all levels of the chain for us,” he said. “Right now, approximately 47% of the farmland in our area is controlled by 6% of the farmers.”
The other big fear among roundtable participants is continued market volatility. Although grain prices remain at record levels at the present (thanks in part of record low carryover amounts from previous years), some retailers feared that a steady climb in commodity prices could bring about another “2008-like” scenario of rapidly falling values.
Two factors that bear watching in 2012 for some idea of the overall market’s stability, said participants, are the fortunes on Capitol Hill for ethanol and the bankruptcy probe of grain trader MF Global, where up to $1.2 billion of customer money appears to be missing. “If MF Global’s collaspe affects grain trading going forward, the market could turn very quickly,” warned one retailer.